Queensland debt to increase again, despite Treasurer Jackie Trad’s $5bn ‘Future Fund’

Total government debt in Queensland is set to increase further, despite Jackie Trad’s $3bn raid on surplus public super.

Queensland Treasurer Jackie Trad.

Queensland’s total government debt will soar past $91bn in four years, despite Treasurer Jackie Trad raiding $5bn from the surplus of bureaucrats’ superannuation in an effort cut borrowings.

Delivering the mid-year budget review, Ms Trad confirmed the state’s projected debt for 2022-23 had skyrocketed more than $1bn in the six months since the June’s budget, from $90.7bn to $91.8bn.

She blamed the debt explosion on a fast-tracking of “critical” infrastructure spending, sparked by the federal government bringing forward its funding for roads projects around the state.

But the debt increase will not be reversed by Ms Trad’s new debt reduction plan: a “Queensland Future Fund” created by taking $5bn from the surplus of the public service’s defined benefit superannuation fund, and modelled on the NSW Generations Fund.

Ms Trad managed to cling to an operating surplus of $151m for the 2019-20 financial year, $38m skinnier than predicted in the budget, despite royalties plunging $677m and GST revenue falling $202m.

Coal royalties alone fell from $4.3bn predicted in the budget to $3.7bn, thanks to diving coal prices.

The state’s budget bottom line was saved by Ms Trad’s public service razor gang – established in the June budget – which found $700m in cuts, including slicing the Queensland government’s generous daily rate for external consultants by 10 per cent.

The razor gang, which employs consultants to advise the government on how to slash the $1.5bn annual spend on consultants, has found $1.4bn in cuts to be made over the next four years.

But overall, the economic outlook is grim, with Queensland’s economic growth slowing from a predicted 3 per cent in 2019-20, to 2.5 per cent, and unemployment getting worse, increasing from a forecast 6 per cent, to 6.25 per cent.

The government’s spending on public service wages is also spiking, costing the budget $25.5bn this financial year, up $115m since the June budget.

Opposition treasury spokesman Tim Mander criticised Ms Trad’s future fund as a “raid on public servants’ superannuation”.

“(It) is not a debt plan, it’s a sham,” Mr Mander said. “According to Jackie Trad’s own figures, it will take the future fund 230 years to clear Labor’s massive debt.”

But Ms Trad said the fund would act as a debt offset account, to be invested aggressively by the government’s investment arm, QIC, with income to be used exclusively to pay down debt. She said, based on rough estimates, it could generate $400m a year – but the new accounts show debt would still climb in the out years of the forward estimates.

The raid mirrors former Treasurer Curtis Pitt’s controversial move in 2016, when he promised to take $4bn from the defined benefit fund’s surplus – $2bn to pay down debt and $2bn to spend on infrastructure.

Ms Trad yesterday revealed the $2bn for debt was never used, so would form part of her $5bn fund.

Queensland is the only state with fully funded public service superannuation liabilities. The defined benefit fund’s surplus will sink from $7.3bn to $2.3bn after legislation is passed early next year to establish the $5bn future fund.

Ms Trad insisted the defined benefit fund would remain in surplus, and public servants’ super balances would not be touched.

But a spokesman for Ms Trad would not say whether state actuary Wayne Cannon – who annually reviews the health of the defined benefit fund – had thought the fresh raid was a good idea, only that he was “consulted”.

Mr Cannon’s latest report was considered by the QSuper board on Thursday, but QSuper declined to publicly release it. It has 20 business days to publish.